Keppel Profit Falls on Lack of Asset Sale, China Competition

Keppel Corp. (KEP), the world’s largest oil-rig maker, posted a 22 percent decline in fourth-quarter profit because of smaller contribution from its property unit and rising competition from Chinese shipbuilders.

Net income dropped to S$305 million ($249 million) in the three months ended Dec. 31 from S$389 million a year earlier, the company said in a statement to the Singapore stock exchange today. Sales climbed 7.1 percent to S$3 billion.

Keppel won S$10 billion of contracts last year and the company has a net order book of S$12.8 billion, according to the statement. Deliveries stretch out to 2019, it said. Oil companies are boosting spending on new equipment because of higher crude prices and declining reserves.

The rig-maker gained 0.4 percent to close at S$11.34 in Singapore trading before the earnings announcement.

The company signed a $4.1 billion order in August to build five semi-submersible rigs for Sete Brasil Participacoes SA, an affiliate of Brazil’s state-backed oil company Petroleo Brasileiro SA. (PETR4) It received a $950 million contract to build a floating oil production unit for Petrobras.

Sete Brasil said in February it will spend $27 billion by 2020 on drilling units. The company ordered an $809 million semi-submersible rig from Keppel in December.

To contact the reporter on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net

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